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Let’s say there are major changes with your custodian or broker dealer such as the Schwabitrade mega-merger in the works today.
What if your partner or one of your key team members leaves?
What if you experience a major health issue or you are forced to take some time off to deal with a family matter?
What if you want to make a significant change in your service model, raise your prices, or leave your current broker-dealer?
These changes are inevitable for the average practice.
The practice that withstands these changes has a loyal client base.
Think of it as building a moat that redirects your clients back to you.
Some will still go around the moat and leave, but the right influence will turn most clients around and bring them back.
How do you build a moat around your client base?
1. Create the bond of loyalty back to you
Clients are loyal to a lot of things.
They could be loyal to price, investment philosophy, investment performance, asset allocation/tactical holdings, or the custodian or broker dealer.
They could be loyal to your area of specialty, the customer service lead on your team, or the planning services offered.
As an advisor, you want your clients to be loyal to you.
That does not happen overnight, but there are proactive ways of cultivating and maintaining that loyalty.
A comprehensive client-engagement strategy is a good start and can include keeping plans up-to-date, anticipating market movements, and adapting to changes in the client’s individual situation.
2. Build a proactive communications plan
You do have a proactive communications plan, don’t you?
It is not good enough to post third-party curated content on social media, send letters quarterly about what happened in the recent history of the market or lob-in the periodic call or email.
Leverage periodic one-to-many communications about upcoming changes in the practice and hold periodic webinars or events which educate the clients on aspects important to your philosophy and expertise.
For example, if an investment philosophy or if financial planning is critical to your value-add, make sure to indoctrinate your flock in its importance and train them on the benefits of how you do business.
Formal or informal client events can also strengthen the bond with your clients.
3. Listen for signals
You will lose clients, but do you know when they are at risk? Do you know the common reasons their loyalty wanders?
For example, an aging, solo practitioner may get a question from a long-time client about his or her succession plan.
Out-of-the-blue a normally disengaged client may suddenly pepper you with questions about the reasons behind their current holdings.
A client may ask a question or make a comment to indicate they may be unhappy and you might miss the opportunity to explore the issue and address it right on the spot.
Or, perhaps you failed to engage a spouse in your work and your primary client is in bad health, dies, or the couple goes through a divorce.
There still may be time and opportunity to fold the spouse into your engagement process but doing so early and proactively will be a lot more effective.
Advisors can check-in frequently with clients and inquire to how they are doing and have antenna up for signals that the client is at risk.
Your marketing communications can also offer clues.
Event attendance, survey responses, and open and click-through rates on emails are all ways of taking their pulse.
4. Identify and address structural problems
Some advisors let their client-base age and are then are on a treadmill of losing assets or clients faster than they are adding them.
Others scale the practice to the point where they are too busy to service all their clients but don’t bring in support.
Other practices thrive in certain types of markets but are under stress in others.
Some planning-based practices are doing a mountain of work up front but little in the subsequent years.
From a strategy standpoint, every practice has “loose bricks” they need be aware of or proactively address.
They key here, of course, is a combination of ongoing communication, getting feedback from the client base and individuals, identifying both individual and system signals of risk, and directly addressing systematic risks such as over-reliance on performance or lack of succession plan.
You’ll also need a marketing platform that excels at tracking behavior and measuring engagement.
Over time, your moat will deepen and you’ll have built a pretty solid structure for catching clients before they leave.
Bob Hanson is a fractional marketer and author of Marketing Power for Financial Advisors. Get his checklist, Nine Questions Advisors Must Ask Before They Hire a Marketing Agency, Fractional or Full-Time Marketer, click here.
Read more articles by Bob Hanson
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
